Operating a business isn’t easy– it takes a vision of success, the right team, and a continued thirst for growth. And at some point, all businesses require funding to shape these dreams into a reality.
Pre-approval for financing is a great indicator that you’ll be able to get the funding you need. Even if you’re pre-approved, though, it’s possible for a lender to learn new information in the later stages of the deal that prevents the deal from closing.
But it’s not completely out of your hands. With the right strategy and a proactive approach, you can ensure that your deal reaches the finish line.
In our new eBook, 9 Ways to Prevent Your Business Loan From Dying, we tell you everything you need to know to get your next deal approved. Read on to get a quick overview of what you can do to help your deal close. You can also learn even more of these helpful tactics to finish your deal by downloading your full copy here!
When it comes to lenders issuing an approval, almost everything you do in the months leading up to this point counts. If it’s visible on a bank statement, then lenders could take note—and may (or may not) change their minds.
These are the steps you can take to make sure that your deal makes it through the final steps and your business gets financing!
While credit score is no longer the make-or-break factor that it once was, your business’s annual sales are still crucial.
This figure tells the lender how much money your business is making on a monthly or yearly basis.
For this reason, it’s helpful for you to deposit all of your monies into your business bank account. This includes not only credit card sales, but also cash sales.
In the same vein, lenders will want to make sure that your account is positive. When you apply for small business financing, you should always avoid having a negative balance.
Managing cash flow isn’t always a cakewalk—it’s actually one of the most common difficulties among small business owners.
But if you’re planning to grow your business and need financing, getting your business bank account positive is a must. Underwriters tend to steer clear of making significant offers to applicants with negative balances.
When it comes to approvals, the more cash you have on hand, the better.
Underwriters consider a variety of factors. But when it comes to approvals, they’re primarily interested in whether or not you have the capacity to pay the full amount back on the appropriate timetable.
Visible liquid assets increase your chances of qualifying for financing. Learn more about what types of liquid assets underwriters may look for when underwriting your deal in the full ebook!9 Ways to Make Sure Your Deal Doesn’t Die in Final Underwriting
Sure, business growth is a key consideration when it comes to evaluating your application. But demonstrating growth alone may not put you over the finish line.
Consistency, on the other hand, will.
Cautious underwriters might see sudden and unsustained sales spikes as an outlier or fluke. They might also consider them alarming.
Higher sales will never hurt you, but be sure to avoid manipulating the numbers to show massive spikes.
Before giving the final stamp of approval, underwriters will take a thorough look inside your account.
By examining your credit history, they’ll be able to find all of your past, current, and future debts.
For this reason, it’s important that you accurately report all of your debt the first time around.
If you owe 90K, then don’t tell them that you owe 50.
Lying about your debt to an underwriter will never help you, so be sure to always report your debts in full detail.
It’s not uncommon for business owners to have multiple bank accounts. This is an organizational tactic many business owners use to keep their monies organized by separating payroll, operating, and other expense/revenue streams.
But while you may know how this money is organized, it may not be clear to your underwriter.
Underwriters will attempt to track all of the revenue you’re reporting inside your provided bank accounts. If you report $100K in revenue, but they can only find $70K, then that’s a huge discrepancy.
Always inform the underwriter about all of your business bank accounts so they get the clearest picture.
When there’s an opportunity to take your business to the next level, it’s never wise to wait around. Financing can give you the resources you need to pursue your new opportunity, instead of letting competitors get the edge.
But if you’re not prepared to take on financing (and be examined by underwriters), then you may leave it up to chance.
With our eBook, you’ll learn everything you need to know to get on the right track before your small business loan goes into final underwriting.
You’ll get more information about the points above, and more tips about:
Snag your free copy now (before it’s too late!)9 Ways to Make Sure Your Deal Doesn’t Die in Final Underwriting
National Business Capital & Services is the #1 FinTech marketplace offering small business loans and services. Harnessing the power of smart technology and even smarter people, we’ve streamlined the approval process to secure over $1 billion in financing for small business owners to date.
Our expert Business Financing Advisors work within our 75+ Lender Marketplace in real time to give you easy access to the best low-interest SBA loans, short and long-term loans and business lines of credit, as well as a full suite of revenue-driving business services.
We strengthen local communities one small business loan at a time. For every deal we fund, we donate 10 meals to Feeding America!
Megan Capobianco is the Marketing Manager at National Business Capital & Services. Megan is passionate about helping business owners along their journey - providing them with relevant content they can use in their day-to-day operations.